"All along, Reese has been very open with her kids about her plans to expand the family," the source says about Ava, 12, and Deacon, 8. "Especially [because] Ava is at a sensitive age, Reese always makes sure to consult with her. She is very respectful of Ava's feelings."

With a baby on the way, Witherspoon, who turned 36 on Thursday, plans to spend less time working and more being with family, says the source.

"Reese has worked nonstop, but Jim takes great care of the kids in L.A. while she is out of town. Jim and Ryan [Phillippe] also get along fine and they have shared the responsibility while Reese is working.

"Reese gushes that Jim is great with her kids," the source adds. "And the kids seem to really like him."

But life with Witherspoon and Toth as parents isn't the typical Hollywood upbringing that fans might imagine. For one thing, home-cooked meals are a priority. The actress, says the source, "is big on the whole family eating together and talking about their day."